Tax planning in case of slump sale or business sale

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Querist : Anonymous

Querist : Anonymous (Querist)

23 January 2013 How does companies plan their income tax liability in case of a slump sale of its 100% subsidiary?

OR

Can the co. follow following steps to ignore tax on Long term Capital Gain:-

1) De-merge the 100%subsidiary co. from its parent co.

2)Get De-merged co. registered on any recognized stock exchange (e.g Jaipur stock exchange).

3) Transfer entire shares of the De-merged co. to the purchaser.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

23 January 2013 A subsidiary company is a separate entity from its holding company. The demerger procedure is not required. In case the shares held by the holding company as an investment in the subsidiary company are transferred to the prospective buyer, then also planning is possible.
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Querist : Anonymous

Querist : Anonymous (Querist)

23 January 2013 dear sir,
what if subsidiary co. is not a listed co., should the subsidiary co. get listed so that transfer of shares takes place through recognized stock exchange & gets LTCG exempt as LTCA being shares held for more than 12 months is exempt from tax on LTCG.
Also is it possible to transfer entire share holding to prospective buyer though recognized stock exchange?

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

23 January 2013 Transfer of shares can be made even if the subsidiary company is an unlisted company.
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Querist : Anonymous

Querist : Anonymous (Querist)

23 January 2013 thank you sir. this is for the first time i wrote a query.
thank you so much for your reply.

CA PARAS BAFNA

CA PARAS BAFNA (Expert)

23 January 2013 That I know.
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Read, as much as you can, about the subject matter and try to resolve the issues at your own. That will boost your confidence.
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The lesson being given to here is to read more about ...1. Slump Sale.
2. Subsidiary Company & Holding Company.
3. Public Ltd & Pvt Ltd Co.
4. Share-Transfer.
5. Block Deals on Stock Exchnages
6. Merger & Demerger

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